LIC’s open offer for 26% stake in IDBI Bank to begin from 3 December

The open offer, at ₹61.73 per equity share, will close on 14 December. Photo: Mint

New Delhi: LIC’s open offer to purchase shares from the minority shareholders of IDBI Bank will kick-start from 3 December, IDBI Bank said on Thursday.

The open offer, at ₹61.73 per equity share, will close on 14 December.

LIC has offered to acquire 2,04,15,12,929 equity shares, representing 26% of the fully paid-up equity capital of IDBI Bank as per the open offer process in accordance with Sebi regulations, IDBI Bank said in a regulatory filing.

The open offer is in connection with the LIC’s acquisition of 51% controlling stake in the state-owned IDBI Bank. As per Sebi takeover code rules, an acquirer company has to give an open offer to the shareholders of the target company on acquiring shares or voting rights of 25% or more, so that they get an exit route or earn profit by way of selling their equity in the target company.

The LIC will buy shares in the open offer at a price of ₹61.73 per share.

As on date, he acquirer (LIC) holds 67,36,20,000 equity shares representing 14.90$ of the voting rights in target company (IDBI Bank).

At a price consideration of ₹61.73 per equity, assuming full acceptance under the offer for 2,041,512,929 shares (or 26%), the total payable by the acquirer (LIC) comes out to be over ₹126,02.25 crore.

LIC said it will pay the shareholders participating in the open offer for selling their stake in IDBI Bank on 31 December.

Last week, LIC had come out with this open offer for buying 26% of the equity shares of IDBI Bank from its minority shareholders.

The board of the IDBI Bank in its meeting held on 4 October had approved issuance of preferential shares in favour of LIC so that the insurer gets a controlling stake of 51% in the bank.

The government has already approved the proposal of LIC to increase the stake in IDBI Bank. The bank, in which the government holds 85.96% stake, had posted a net loss of ₹2,409.89 in the quarter ending June 2018. It had a gross non-performing asset (NPA) of about ₹57,807 crore. Stock of IDBI Bank closed 0.42% down at ₹58.80 on BSE on Thursday.